Methods utilizing computers to sell products, for example, selling products via a network, such as the internet, are in widespread use. Traditionally, products are distributed from a manufacturer to a consumer through a series of intermediaries, each which has a particular business function. The most common intermediaries are known as “distributors” and “retailers”. Distributors purchase products in large quantities from manufacturers and resell the products in smaller quantities to retailers. Retailers, in turn, resell the products to consumers. In addition to selling products to consumers, retailers may also provide additional services, such as purchase advice and technical support. These services are typically not provided by manufacturers or distributors.
Generally, distributors and retailers carry products from several manufacturers. Usually, but not always, distributors operate at a national level, while retailers operate at a local level. A retailer may place an order with a distributor for products from a variety of manufacturers, which may be sent as a single shipment. This reduces the overall cost of shipping. In some industries, the line between distributors and retailers is blurred. Some distributors sell directly to consumers, and some retailers purchase directly from manufacturers. Therefore, hereinafter the terms “distributor” and “retailer” will be used interchangeably to describe all intermediaries.
Retailers benefit from the traditional method of distribution because they can purchase a variety of products from different manufacturers without contacting each manufacturer directly to arrange individual product shipments. Manufacturers benefit because they can ship their products in bulk without dealing with a multitude of retailers each having its own purchase and shipment policies and unknown risk of non-payment.
The fundamental rules of business require intermediaries to increase the price of goods they handle in order to cover their business expenses and create a profit margin. Manufacturers who sell through distributors and retailers generally offer a discounted price to distributors and retailers to cover expenses and profit thereby lowering their own profit margin. Without distributors and retailers, manufacturer would command a higher price for their goods and consumers would pay less. Both manufacturers and consumers would prefer to work directly together whenever practical in order to maximize manufacturer profits and minimize the consumer costs.
The realities of business, however, have until recently prevented manufacturers and consumers from working closely together. Historically, it has not been possible to easily distinguish between consumers who need only the products and services offered by the manufacturer and those who need additional products and services offered by the retailer until after significant time has been spent by the retailer with the consumer. In addition, the cost of performing the traditional customer service functions of a retailer often outweigh the additional profit margin to the manufacturer gained by selling directly to the consumer. As a consequence, manufacturers tend to work primarily with distributors and retailers, and forgo the profit potential of consumer direct sales.
Further, selling directly to consumers can alienate local retailers that become aware of the manufacturer's direct marketing efforts, and are apt to view the manufacturer as a serious competitor instead of a business ally. Distributors and retailers, therefore, tend to avoid manufacturers with significant consumer direct sales. As a result, manufacturers tend to work primarily with distributors and retailers rather than risk losing their traditional distribution network.
Global networks, such as the internet, have revolutionized business by allowing manufacturers to communicate directly with consumers at very low cost. Consumers can order products directly from manufacturers, and manufacturers can fill these orders by shipping directly to the consumers. The problem remains, however, that dealing with all consumers directly is too expensive and too risky for most manufacturers. In addition, consumers continue to face the problem that ordering and shipping from multiple manufacturers is frequently more expensive and less convenient than purchasing from a single local retailer.
Some data interchange systems have been developed to link manufacturers, distributors and retailers so that information regarding orders from consumers can be shared electronically. These electronic and computer software systems link the computer databases of the manufacturers, distributors and retailers so they can share information including, for instance, inventory levels, product specifications, and expected shipping times. However, these prior art integrated systems are complex and expensive, so their use has been limited to relatively large companies. Therefore, small retailers, having no affordable, automatic system for sharing such information with distributors and manufacturers, are left to fill orders manually by traditional methods.
What is needed is a simple, automatic system which can identify whether an individual consumer is best suited to deal directly with a manufacturer or with a retailer, while additionally identifying the best method for distribution to minimize the final cost to the consumer, without disrupting the traditional distribution network already in place.